11/14/2007 @ 6:00PM

Ahmadinejad Tightens Political Grip

There was a time when Iranian president Mahmoud Ahmadinejad was seen as a relatively isolated figure within his country’s complex political system. Despite his victory at the polls in 2005, Ahmadinejad’s nominations for oil minister were rejected three times by the Iranian parliament. His radical foreign policy stance was sidelined by pragmatists such as nuclear negotiator Ali Larijani. Even the support of Iran’s Supreme Leader Ayatollah Ali Khamenei for his president was not always clear. (See “Iran’s President Likely To Lose Favor”)

But things have changed. Ali Larijani is out: last month he tendered his resignation as Iran’s chief national security negotiator, a move widely interpreted as a victory for the more hard-line Ahmadinejad. There is little doubt the move could have taken place without the blessing of Ayatollah Khamenei. And now Ahmadinejad’s nomination for the head of the oil ministry has been accepted, with 217 out of 246 law-makers approving the appointment of Gholamhossein Nozari on Wednesday.

According to Iran’s Mehr News Agency, Nozari expressed his appreciation of the former oil ministers’ efforts, but added that Iran’s oil minister should be given more “authority” over the development of the country’s oil industry.

But will it be Nozari or Ahmadinejad that really gets more authority over Iran’s energy sector as a result? Analysts believe it may very well be the latter: the new oil minister is seen as close to the president, and Ahmadinejad has also been busy sneaking other allies into the ministry under the parliament’s nose.

“He has used his power to appoint vice-ministers without them having to be approved by parliament,” said Samuel Ciszuk, analyst with Global Insight. Last month, Ahmadinejad appointed Ali Kordan, a government insider with no energy credentials, as vice-minister for oil.

Nozari does have a background in the energy sector, which partly explains the strong support he got from law-makers. He has been Iran’s acting oil minister since the departure of his predecessor Kazem Vaziri-Hamaneh in August, and has experience negotiating with international oil companies. He publicly locked horns with French company
Total
in September, as heated discussions over the development of the South Pars natural gas field reached breaking point over prices. (See “Total Caught In France-Iran War Of Words”)

But if Ahmadinejad shores up control of Iran’s oil industry, it could mean a rough ride ahead for energy investment in the Islamic republic.

“Future negotiations will most likely not be easier when it comes to setting profit margins and accepting international oil company price calculations,” said Global Insight’s Ciszuk.